DEORA TRADING COMPANY, MUMBAI V. ITO 20(2)(1), MUMBAI

ITA 643/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3603 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-02-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 27-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: B S BIST
• Section: 147; 246

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER / I .T A NO. 6 43 /M/201 4 ( / ASSESSMENT YEAR: 200 3 - 0 4 M/S DEORA TRADING COMPANY A - 69 MIDC CHAKAL MAROL INDL ESTATE, ANDHERI (E) MUMBAI 400093 / VS. INCOME TAX OFFICER(20)(2)(1) PIRAMAL CHAMBERS,LOWER PAREL MUMBAI 400013 ./ ./ PAN/ GIR NO. AABFD4909N ( / APP ELLANT ) .. ( / RESPONDENT ) / APP ELLANT BY: SH. B. S. BIST / RESPONDENT BY: NONE / DATE OF HEARING : 1 8 . 0 2 . 201 6 / DATE OF PRONOUNCEMENT : 17 . 0 5 .2016 / O R D E R PER RAM LAL NEGI, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 21 , MUMBAI DATED 28.11.2013 PASSED UNDER SECTION 246A OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) FOR THE ASSESSMENT YEAR 2003 - 04 . 2. B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , ENGAGED IN THE BUSINESS OF TRADING IN FABRICS , FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003 - 04. THE ORIGINAL ASSESSMENT UNDER SECTION 143( 3 ) OF THE ACT WAS COMPLETED ON 27.02.2 0 06 DETERMINING THE TOTAL INCOME OF R S. 11 , 08 , 607/ AFTER MAKING ADDITION OF RS. 7 , 23 , 816 / - ON ACCOUNT OF GROSS PRO FIT, RS. 1 , 61,704/ ON ACCOUNT OF LABOUR CHARGES AND RS. 1 , 59 , 047 / - ON ACCOUNT OF CAR HIRING CHARGES UNDER SECTION 40A ( 2 )( B ). ITA NO .643/M/14 M/S DE ORA TRADING COMPANY 2 3. AGAINST THE SAID ORDER, T HE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE CONFIRMED THE ADDITION OF R S. 7 , 23 , 816 / - ON ACCOUNT OF GROSS PROFIT AND ONE THIRD OF LABOUR CHARGES AND ALSO REDUCED THE ADDITION ON ACCOUNT OF CAR HIRING CHARGES TO R S. 1 , 20 , 000/ . DISSATISFIED WITH THE FINDINGS OF THE LD. CIT(A), THE ASSESSEE CHALLENGED THE SAID O RDER BEFORE THE ITAT. THE ITAT AFTER HEARING THE PARTIES REDUCED THE DISALLOWANCE OF LABOUR CHARGES TO R S 1,00,000/ - AND DELETED THE DISALLOWANCE UNDER SECTION 40 ( A ) ( IA ) OF CAR HIRING CHARGES , HOWEVER , SET ASIDE THE ADDITION WITH REGARD TO GP RATIO TO TH E FILE OF ASSESSING OFFICER FOR RE - EXAMINING THE ISSUE OF GROSS PROFIT AFRESH . ACCORDINGLY , THE AO AFTER HEARING THE ASSESSEE PASSED ORDER UNDER SECTION 143 ( 3) READ WITH SECTION 147 OF THE A CT AGAIN MAKING DISALLOWANCE ON ACCOUNT OF GROSS PROFIT TO THE TUNE OF RS. 7 , 23 , 816 / - . THIS ORDER WAS FURTHER CHALLENGED BY THE ASSESSEE BEFORE THE CIT (A) WHO AFTER HEARING THE ASSESSEE PASSED THE IMPUGNED ORDER UNDER SECTION 246 OF THE A CT CONFIRMING THE DISALLOWANCE M ADE BY THE AO. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUNDS: 1.THAT THE ASSESSING OFFICER HAS ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES OF THE CASE IN MAKING AN ADDITION OF R S. 7 , 23 , 816 / - ON ACCOUNT OF GROSS PROFIT. 2. THAT THE COMMISSIONER OF INCOME TAX APPEALS HAS ERRED IN LAW AS WELL AS UNDER THE CIRCUMSTANCES IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS UNDE R THE CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION OF RS. 7 23816/ ON ACCOUNT OF GROSS PROFIT. 4. THIS CASE WAS FIXED FOR HEARING ON 06.07.15 . ON THE SAID DATE THE A SSESSEE SOUGHT ADJOURNMENT . ACCORDINGLY , THE CASE WAS ADJOURNED TO 02.11.15. ON 02.11.15 NONE APPEARED ON BEHALF OF THE ASSESSEE. CASE WAS ADJOURNED TO 17.02.16 AND NOTICE TO THIS EFFECT WAS SENT TO THE ASSESSEE THROUGH REGISTERED POST/AD. ON 17.02.16 ON THE REQUEST OF THE ASSESSEE HEARING WAS ADJOURNED TO 18.02.16. ON 18.02.16, CASE WAS CALLED SEVERAL TIMES FOR HEARING BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. FROM THE CONDUCT OF THE ASSESSEE W E ARE CONVINCED THAT THE ASSESSEE IS NO MORE INTERESTED IN PURSUING ITS CASE. MOREOVER, SUFFICIENT OPPORTUNITY HAS ALRE A DY BEEN GIVEN TO THE ASSESSEE TO ARGUE ITS CASE. ITA NO .643/M/14 M/S DE ORA TRADING COMPANY 3 UNDER THESE CIRCUMSTANCES WE ARE CONSTRAINT TO HEAR THE APPEAL EX - PARTE AGAINST THE ASSESSEE AND DECIDE THE APPEAL ON THE BASIS OF MATERIAL ON RECORD AFTER HEARING THE DEPARTMENTAL REPRE SENTATIVE (DR) . 5. BEFORE US, THE LD. DR RELYING ON THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT THE LD. CIT (A) HAS RIGHTLY CONFIRMED THE FINDINGS OF AO AS THE ASSESSEE HAS FAILED BROUGHT ON RECORD ANY MATERIAL DETAIL /EVIDENCE TO SHOW THAT THE QUALITY OF GOO DS SOLD TO THE SISTER CONCERNS WAS INFERIOR THAN THOSE SOLD TO THIRD THE PARTIES 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DEPARTMENTAL REPRESENTATIVE (DR) AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS. 7,23,816/ - MADE BY THE AO ON ACCOUNT OF GROSS PROFIT. THE AO HAS MADE THIS ADDITION ON THE GROUND THAT THE ASSESSEE HAD SOLD GO OD S TO THIRD PARTIES WITH THE MARGIN OF 1.959% AND TO ITS SISTER CONCERNS WITH A MARGIN OF R S 0.236% SO AS TO PASS OVER THE PROFIT TO THE SISTER CONCERN S AND TO DECLARE LESS GROSS PROFIT RATIO OF THE ASSESSEE FIRM FOR THE RELEVANT ASSESSMENT YEAR. ACCORDINGLY, DURING THE SECOND ROUND OF ASSESS MENT THE ASSESSEE WAS ASKED TO EXPLAIN AND JUSTIFY THE SAME. IN RESPONSE THEREOF THE ASSESSEE CONTENDED THAT IT HAD SOLD THE GOODS TO ITS SISTER CONCERNS AT MARKET PRICE AND EARNED INCOME ON THOSE TRANSACTIONS . T HE ASSESSEE FURTHER CONTENDED THAT IN THE BU SINESS OF CLOTHING MATERIAL, THE PRICE OF GOODS IS AFFECTED BY THE QUALITY QUANTITY AND NATURE OF GOODS AND FURTHER EXPLAINED THAT THE GOODS SOLD TO ITS SISTER CONCERNS WERE OF A DIFFERENT QUALITY THAN THOSE SOLD TO THIRD PARTIES. T HE AO DID NOT ACCEPT THE EXPLANATION GIVEN BY THE ASSESSEE AS NO DOCUMENTARY EVIDENCE WAS PRODUCED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. EVEN BEFORE THE LD. CIT (A) NO EVIDENCE WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. THE LEARNED CIT (A) HAS CONFIRMED THE ADDITIO N MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS FAILED TO PROVE THE CONTENTION DURING THE ASSESSMENT/REASSESSMENT BEFORE AO OR DURING APPELLATE PROCEEDINGS. UNDER THESE CIRCUMSTANCES, IT CANNOT BE CONCLUDED THAT THE CONCURRENT FINDIN G S OF THE AO AND T HE APPELLATE AUTHORITY IS NOT BASED ON EVIDENCE ON RECORD OR CONTRARY TO THE PROVISIONS OF LAW OR AGAINST THE SETTLED ITA NO .643/M/14 M/S DE ORA TRADING COMPANY 4 PRINCIPLES OF LAW . HENCE, I N OUR CONSIDERED OPINION , THE IMPUGNED ORDER DOES NOT SUFFER FROM ANY INFIRMITY OR ILLEGALITY. WE , THEREFORE , D O NOT FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. ACCORDINGLY, WE DISMISS ALL THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003 - 04 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY , 201 6 . SD/ - SD/ - ( RAJENDRA ) ( RAMLAL NEGI ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED : 17 TH MAY , 201 6 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI